TCS: Currency Volatility Plays Spoilsport

Jul 14, 2017

India's largest software firm, Tata Consultancy Services (TCS) has announced its financial results for the first quarter of FY18. The company has reported a 0.2% QoQ decrease in consolidated sales while the consolidated net profit was up 1.7% QoQ.

Performance Summary

• Revenues decreased by 0.2% QoQ in 1QFY18 in rupee terms. Revenues increased by 2% QoQ in constant currency terms and by 3.1% QoQ in US dollar terms. Volumes were up by 3.5% QoQ.
• The operating margin was under a bit of pressure due to wage hikes and the appreciation of the rupee. It was down sequentially to 25.1% 1QFY18. The operating profit decreased by 8.8% QoQ.
• The other income decreased by 3.8% QoQ and came in at Rs 9,590 million for the quarter.
• The net profit for the quarter came in at Rs 60,980 million, up 1.7% QoQ. The net margin was 20.6%
• The management has declared an interim dividend of Rs 7 per share.
  
  

  Consolidated Financial Snapshot

  (Rs m)	4QFY17	1QFY18	Change
  Sales	296,420	295,840	-0.2%
  Expenditure	215,100	221,710	3.1%
  Operating profit (EBITDA)	81,320	74,130	-8.8%
  Operating profit margin (%)	27.4%	25.1%
  Other income	9,970	9,590	-3.8%
  Finance Costs	80	270	237.5%
  Depreciation & amortisation	5,050	4,990	-1.2%
  Profit before tax	86,160	78,460	-8.9%
  Tax	19,940	18,960	-4.9%
  Profit after tax	66,220	59,500	-10.1%
  Minority Interest	120	100	-16.7%
  Other comprehensive income	-6,120	1,580
  Net Profit	59,980	60,980	1.7%
  Net profit margin (%)	20.2%	20.6%
  No. of shares		1,970.4
  Diluted earnings per share (Rs)*		130.5
  P/E ratio (x)*		18.7

  *On a trailing 12 months basis

  
  

  Segmental Summary

  By Domain	4QFY17	1QFY18	Change
  BFSI	97,522	97,331	-0.2%
  Retail & CPG	36,460	36,092	-1.0%
  Communications & Media	21,342	21,596	1.2%
  Manufacturing	21,935	22,188	1.2%
  Life Sciences & Healthcare	20,453	21,005	2.7%
  Energy & Utilities	10,968	11,834	7.9%
  Travel & Hospitality	10,078	10,354	2.7%
  Technology & Services	23,121	23,371	1.1%
  Regional Markets & Others	54,541	52,068	-4.5%
  By Market
  North America	157,992	155,316	-1.7%
  Latin America	6,225	6,213	-0.2%
  UK	40,610	41,122	1.3%
  Continental Europe	34,978	36,980	5.7%
  India	20,157	20,709	2.7%
  Asia Pacific	28,753	28,105	-2.3%
  MEA	7,707	7,396	-4.0%